1.M6-5 (Algo) Analyzing Changes in Price Structure [LO 6-1, 6-4]

Juniper Enterprises sells handmade clocks. Its variable cost per clock is $11.40, and each clock sells for $19.00. The companys fixed costs total $10,336. Suppose that Juniper raises its price by 40 percent, but costs do not change. What is its new break-even point?

Laguna Print makes advertising hangers that are placed on doorknobs. It charges $0.12 and estimates its variable cost to be $0.08 per hanger. Lagunas total fixed cost is $3,144 per month, which consists primarily of printer depreciation and rent. Suppose that the cost of paper has increased and Lagunas variable cost per unit increases to $0.096 per hanger. Calculate its new break-even point assuming this increase is not passed along to customers.

Jasper Company has sales of $183,000 and a break-even sales point of $123,300. Compute Jaspers margin of safety and its margin of safety ratio.